Why Clean fuels should be included in the Clean Industrial Deal 

The Clean Industrial Deal, set to be presented within the first 100 days of the new European Commission, will be the flagship initiative for president von der Leyen in the transition to climate neutrality and in strengthening Europe's industrial competitiveness.

One of its key opportunities lies in the shipping sector, as it can lay the groundwork for the production and uptake of clean maritime fuels in Europe. Embedding a policy framework for this ambition into the Clean Industrial Deal will as well contribute to the Net-Zero Industry Act's The Net-Zero Industry Act is a European regulation designed to accelerate the transition to net-zero emissions by 2050. It aims to promote the development and deployment of clean technologies across various industries. benchmark of 40 percent manufacturing capacity in Europe by 2030. The key question is "What should such a framework entail?"

Of all goods transported, 90 percent is carried by sea. In Europe, waterborne transport is responsible for approximately 76 percent of external trade and close to 40 percent of internal trade. Hence, waterborne transport provides us with essential resources such as food, energy, and the device that you are using to read this article.

To decarbonise shipping while strengthening competitiveness and safeguarding European trade, investing in the security of supply of clean shipping fuels is essential for Europe’s transition to climate neutrality. These fuels must become available in abundancy within Europe and its many borders. This is important to make these cleaner fuels competitive with the more conventional fuels. To this end, the European Commission must include a policy framework in the Clean Industrial Deal.

Such a policy framework also aligns the Clean Industrial Deal with the outcomes of the Draghi report from 2024. In his report on European competitiveness, Mario Draghi emphasises the need for Europe to secure a supply chain for clean maritime fuels. Draghi warns that this urgency is required to achieve the target of net-zero by 2050.

The report highlights that clean fuels can still be up to five times more expensive compared to conventional fuels, making this goal seem out of reach. To address this challenge and achieve zero-emissions by 2050, Draghi’s report estimates that approximately €40 billion in annual investment will be required between 2031 and 2050. The risks of such investments, presents a challenging scenario for companies, financial institutions and investors. All of whom require methods to de-risk investments and to mitigate investor concerns. 

The maritime sector is eager to see the Commission take the next step by formulating a comprehensive policy framework, including a roadmap, within the Clean Industrial Deal. This in order to accelerate the production and deployment of clean marine fuels in Europe and close the gap with conventional fuels.

To turn this into a success, it is key to de-risk investments in renewable and low carbon fuels, for example via contracts for difference and auctions as a service. Both tools foster investments in sustainable initiatives by offering the financial sector predictability and stability, which is required to mobilize the necessary private financial resources.

Equally important is the development of infrastructure to ensure the efficient delivery of these fuels to ships. To this end, it is crucial that the Commission continues to encourage member states to prioritize the construction of such infrastructure, as outlined in the Alternative Fuel Infrastructure Regulation (AFIR) AFIR (Alternative Fuel Infrastructure Regulation) is a European regulation aimed at promoting the development of infrastructure for alternative fuels. Its goal is to accelerate the transition to sustainable transportation solutions and reduce CO2 emissions. . This presents a significant challenge for harbours, especially given the EU’s legal deadlines for emission reductions by 2030, as acknowledged in the Draghi report. Therefore, continued support from the Commission and the member states is essential to help meet these goals. 

Lastly, the dedicated envelope for the maritime sector under the Innovation fund should be used as soon as possible to bridge the price gap between conventional and low-and zero carbon shipping fuels.

The Clean Industrial Deal presents Europe with a crucial opportunity to lead the global shift toward sustainable shipping, while addressing its own strategic autonomy.

This starts with addressing investment uncertainties in the production and adoption of clean fuels, advancing the necessary infrastructure, and ensuring that funds dedicated to the maritime sector under the Innovation Fund are utilized as soon as possible.